Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. IP85-1497C-William E. Steckler, Judge.
Bauer, Chief Judge, Ripple, Circuit Judge, and Will, Senior District Judge.*fn*
On February 19, 1985, the United States Supreme Court addressed for the third time the applicability of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 216, to the states. Garcia v. San Antonio Metro. Transit Authority, 469 U.S. 528, 83 L. Ed. 2d 1016, 105 S. Ct. 1005 (1985). In round three, the Court held that the commerce clause empowers Congress to enforce the provisions of the FLSA against the states, thus overruling National League of Cities v. Usery, 426 U.S. 833, 49 L. Ed. 2d 245, 96 S. Ct. 2465 (1976), which, in turn, had previously overruled Maryland v. Wirtz, 392 U.S. 183, 20 L. Ed. 2d 1020, 88 S. Ct. 2017 (1968). On October 15, 1985, the plaintiffs, Indiana state police officers, filed a complaint seeking to recover overtime compensation pursuant to the FLSA, 29 U.S.C. § 207. One month later, Congress amended the FLSA to read: "No State . . . shall be liable under section 16 of the Fair Labor Standards Act of 1938 for a violation . . . of such Act occurring before April 15, 1986. . . ." Pub. L. No. 99-150, reprinted in 1985 U.S. CODE CONG. & AD. NEWS, 99 Stat. 787. The district court, 657 F. Supp. 1113 (1987), found that this amendment barred the plaintiffs' claim and that the amendment passed constitutional muster. Plaintiffs appeal and we affirm.
Plaintiffs seek to recover compensation for their overtime work between the time of the Garcia opinion up until April 15, 1986. It is undisputed that during this period, plaintiffs worked in excess of forty hours per week without receiving overtime compensation under the FLSA. Plaintiffs claim that they are entitled to overtime pay for work during this period because they relied on the Supreme Court's opinion in Garcia and began working overtime with the reasonable expectation of receiving compensation for this work as required by the FLSA.*fn1 They argue further that the 1985 FLSA Amendment is unconstitutional because it "completely upset" this reliance in violation of the due process clause. U.S. Const. Amend. V.
Although we doubt whether plaintiffs' reliance on Garcia rises to the level of a constitutionally protected property interest, we need not decide this thorny issue in order to resolve this case. Rather, following the precedent of the Supreme Court, we conclude that the 1985 FLSA Amendment is constitutional because it enacts a rational legislative purpose in a manner that is neither harsh nor oppressive. Pension Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S. 717, 81 L. Ed. 2d 601, 104 S. Ct. 2709 (1984).
It is well established that congressional legislation "adjusting the burdens and benefits of economic life" are presumed constitutional and that "the burden is on one complaining of a due process violation to establish that the legislature has acted in an arbitrary and irrational way." Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15, 49 L. Ed. 2d 752, 96 S. Ct. 2882 (1976) (citations omitted). This strong deference to Congress's national economic policy applies as well to retroactive legislation as long as "the retroactive application of a statute is supported by a legitimate legislative purpose furthered by rational means, . . . ." R. A. Gray, 467 U.S. at 729. This is so even if the legislation readjusting rights and burdens "upsets otherwise settled expectations." Id. at 729 (citing Turner Elkhorn, 428 U.S. at 16). This does not mean, however, that "what Congress can legislate prospectively it can legislate retrospectively. The retrospective aspects of legislation, as well as the prospective aspects, must meet the test of due process, and the justifications for the latter may not suffice for the former." Turner Elkhorn, 428 U.S. at 16-17. Nevertheless, congressional legislation meets the test of due process if "the retroactive application of the legislation is itself justified by a rational legislative purpose." R. A. Gray, 467 U.S. at 730.*fn2
Plaintiffs have failed to meet their burden of showing that the 1985 FLSA Amendment is irrational. Plaintiffs make little effort to argue that the 1985 Amendment does not fulfill a legitimate and rational legislative purpose. The Senate Report to the Amendment explains the purpose of the retroactive provisions: "The Committee has deferred application of the FLSA overtime provisions until exactly one year after the mandate in Garcia so that state and local governments may make necessary adjustments in their work practices, staffing patterns, and fiscal priorities." S. Rep. No. 99-159 at 15, 99th Cong., 1st Sess. 2, reprinted in, 1985 U.S. CODE CONG. & AD. NEWS 663.*fn3 Thus we conclude that Congress acted for the rational purpose of protecting the fiscal integrity of the states and their political subdivisions.
Plaintiffs argue that the Amendment is irrational because it is "particularly harsh and oppressive" and cite R. A. Gray, 467 U.S. at 733 and Welch v. Henry, 305 U.S. 134, 147, 83 L. Ed. 87, 59 S. Ct. 121 (1938). In R. A. Gray, however, the Court concluded that this "standard does not differ from the prohibition against arbitrary and irrational legislation that we clearly enunciated in Turner Elkhorn." 467 U.S. at 733. Following the Supreme Court's lead, we also treat these as the same standard. Most legislation adversely affects some while benefitting others; laws are "harsh and oppressive" in a constitutional sense only when Congress enacts them with an irrational or arbitrary purpose.
The Garcia decision posed a serious dilemma for Congress: how to achieve the desired results of the FLSA without financially overburdening the states. Congress enacted the FSLA to guarantee certain rights and benefits to all workers, including overtime compensation. In Wirtz, the Supreme Court decided that Congress could enforce the FLSA against the states; this decision was overruled in National League of Cities, which held that the FLSA amendments were unconstitutional to the extent that they interferred with the traditional governmental functions of the states. Ten years later, the Supreme Court reversed itself again, paving the way for state employees to become eligible for certain benefits under the FLSA. Although anxious to provide these benefits, Congress also feared the drastic financial impact Garcia might have on the states. Consequently, Congress provided a grace period for the states and local governments in which measures could be taken to enforce the inactive FLSA without jeopardizing their economic viability. Congress chose to "spread the costs," Turner Elkhorn, 428 U.S. at 18, of the implementation of the dormant FLSA among the various employees across the nation rather than placing the burden on the treasuries of the states and their taxpayers. Congress made this difficult, but rational, choice after hearing extensive and heated testimony from all interested parties.*fn4 It is not this court's role to evaluate Congress' wisdom in deciding to place the burden of Garcia on a small percentage of employees for a short period of time instead of threatening the financial stability of states and local governments. See Turner Elkhorn, 428 U.S. at 18-19.
Plaintiffs make a great deal out of their "reliance expectations." Although we do not address whether these "expectations" rise to the level of a constitutionally protected property interest, we do note that the states and local governments also had certain reliance interests upset by Garcia. Many public officials negotiated contracts with their employees in reasonable reliance on National League of Cities and Congress has sought to cushion them, "their taxpayers and . . . the system at large" from the harsh result of Garcia. Kartevold v. Spokane County Fire Protections, 625 F. Supp. 1553, 1559 (E.D. Wash. 1986).
The due process rationality test does not require the courts to second-guess the desirability or value of legislative amendments; this is a distinctively legislative function. Plaintiffs ask us to reassess the judgment of Congress in adjusting the burdens and costs of the FLSA. The due process clause, however, only requires us to review the rationality of the legislation's purpose. Congress enacted the 1985 FLSA Amendment, knowing full well that it would prevent some state employees from receiving overtime compensation for a short period of time, in order to allow the states to maintain fiscal stability. Given this rational, legitimate purpose, we conclude that the plaintiffs have failed to show that the 1985 FLSA Amendment allowing states a grace period after Garcia is irrational, harsh, or oppressive. We hold, therefore, that this economic legislation is constitutional under the due process clause.
The judgment of the district ...